Removing mortgage stress: home buying experts share essential insights

Feeling the pinch with your home loan? We touch base with two of the best in the business to find out how you can manage it better.

The 2023 Finder Housing Report indicates that almost two-thirds (62%) of those who are planning to refinance soon are stressed about their mortgage!¹

With this in mind, we spoke to two experts in the housing space to share essential insights about beating mortgage stress.

Sarah Megginson: "We've seen a big increase in mortgage stress."

Personal finance expert at Finder

Personal finance expert Sarah Megginson believes it's essential to see home loan repayments as part of your overall household budgeting.

"We've seen a big increase in mortgage stress over the last couple of years as rising interest rates have pushed mortgage repayments up by thousands per year," says Megginson. "In many cases, it's risen by $1000 or more a month."

Megginson points to "mindless spending" as a major problem for many Australians. Some examples she notes include purchasing multiple coffees a day, leaning too heavily on takeout, too many streaming services or undisciplined online shopping habits.

Couple this with other additional costs – like late fees on bills – and you can start to see how things add up.

"All of these things seem small but they can snowball into thousands of dollars a year," says Megginson.

If you've already made cutbacks and the situation is still looking tough, other action may be required.

"There are ways to get help," says Megginson. "We've got some tips and resources for managing mortgage stress right here on Finder. There are also resources like the National Debt Helpline (1800 007 007)."

Megginson also notes that every bank has hardship policies. Speaking to them can help you find a mutually beneficial solution.

"You might be able to access a repayment holiday, negotiate a longer loan term to reduce your interest, or even renegotiate all of your debts if you're in financial hardship," says Megginson.

Depending on your circumstances, refinancing may also be an option.

"Refinancing can help solve a few problems," says Megginson. "Refinancing to a fresh 30-year loan term can lower your monthly repayments."

This can mean it'll take longer to own your own home, Megginson notes – but as variable rate loans just require the minimum monthly repayments, you're able to start paying more once you're in a better financial position.

"Refinancing can also be a great way to get into a lower-rate mortgage, leverage a cashback offer or consolidate other debts like car loans and credit cards," says Megginson. "This way, you only have one payment to make each month."

However, you should always make sure that refinancing isn't going to mean you're paying more each month. Fees and application costs can add up quickly – so make sure you speak to a financial professional and your lender first.

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Eliza Owen: "The beauty of Australia's housing market is that if you miss one upswing, you can always get the next one."

Head of Research, Australia at Core Logic

2 in 5 surveyed investors are looking to sell an investment property² – but are Australians better off holding on, or selling now?

Eliza Owen, Head of Research at Core Logic Australia, notes that people opt to sell for various reasons.

"Some sellers are motivated by large windfalls in capital growth – we saw quite a bit of that in 2021 when buying and selling activity was very elevated," Owen says. "Nationally, home values rose around 20% in a year."

A few factors need to be considered if a property's lost value, though. Owen points to rising unemployment, rising interest rates or other economic shocks as potentially reducing buyer confidence.

"It's worth understanding whether your area or property is losing value because of shorter-term, cyclical factors, or longer-term structural factors," says Owen.

For shorter-term or cyclical cases, Owen says it could be worth riding out the downswing in values. The market may recover and you'll be in a better position to maximise your property's value.

"The beauty of Australia's housing market being reliably cyclical is that if you missed one upswing, you can always get the next one," says Owen.

But whatever your specific circumstances, Owen also says that time in the market is important for residential properties. Transaction costs tend to be quite high, so sellers will often understandably want to see enough growth in the value of their property before selling.

"I don't think there's great risk to holding property too long, other than the consideration of ongoing costs and how that affects your budget and quality of life," says Owen. "But if you're so squeezed by your mortgage payments that is affecting your physical and mental health and quality of life, then I would consider that a trigger for changing your situation."

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